House of Cards

A funny thing happened on Techmeme yesterday. Though it may seem a subtle or even nonexistent shift, the stories I found most interesting took a turn away from the tech and toward the media. Gone were anything but the last vestiges of the Steve Jobs changed/tweaked the world argument, and along with it the Google + tracking poll. Instead, the media services are on the rise or fall, most notably Spotify, Netflix, Starz, and in general the unravelling/lash back of big cable/carrier cartel.

The Starz news is most fascinating, with the movie aggregator moving from supporting Netflix to what may be a direct competitive strategy. By pulling back from a deal with Netflix, the company triggered the rationale for Netflix to compete more directly with HBO and Showtime by investing in series development. That in turn pushed Netflix toward focusing on the streaming side of its business and fire its DVD customers.

Similarly, Spotify is beginning to get pushback from what’s left of the CD record business. Small record labels are apparently pulling their artists out on the theory that they’re leaving money on the table from record sales going to all you can stream subscribers. In both cases, the market has reacted by punishing the logic of these transformation drivers. The easy money is on the status quo reaping its payback as we reconfigure back to the Bad Old Days where nothing is available and we’re being “protected” from intellectual property theft.

Actually this is not what is happening. Instead, we’ve gotten a taste of how it might work and there’s no putting the genie back in the bottle. If we focus less on each individual player, and more on the Interplay between them, a different picture emerges. Starz is a case in point. Buried in its strategy of maintaining relationships with Comcast similar to the one abandoned with Netflix is the audacious plan to start offering some of its studio offerings a la carte in tablet form. Why would Comcast let the little player slice and dice its bundling strategy with network and early window film releases?

Because Starz is also going into competition with Netflix by partnering with the streaming service’s competitors, especially Amazon and their incredible Fire hardware. By establishing themselves as a hybrid between streaming and cable aggregation, they have potentially just enough juice together with the second-line streamers to entice the studios to give them access to iPad and Fire rights in return for cutting Netflix down to size. Once that happens, Netflix could extract the same rights to keep the new competitors at bay. Or even more disruptive, join the coalition.

On the Spotify side of the business, the threat of flight from the service is counter-balanced by the ability to buy most music to fill in the gaps from Apple and Amazon or even on CD from Amazon or Walmart. Already we’re getting used to the idea that we get streaming from Column A and Beatles from Column B and special promotions from all of the competitors that fall on either side. One of the players is offering exclusive Rolling Stones live recordings unavailable elsewhere, for example. The genie is out of the bottle and the record cartel is getting a taste of how digital can work for them.

Another fascinating development from either the Times or the Journal — I can’t remember either when or which publication because the iPad has shifted my consumption to store and catch up mode. Shows with large social tweet numbers don’t translate to the shows that prove popular with mainstream audiences. Attempts to differentiate through the use of social signals may be lost in the widespread use of social this year.

What happens when push notification becomes a trusted alert platform and Starz-like services give us the ability to mine social networks and directly link tweets or reviews to auto-downloading those programs to our tablets. Each small chink in the big network model translates to more and more user control by turning preferences into transactions, all completely outside the ratings game. Just as my Times/Journal consumption is moving to on-demand, so is the rest of the media.

My choices begin to be managed by the immediacy with which I want the programming. Like a late-booked flight, I’ll pay more for how it fits into my ability to predict and consume the service. At some point, the economics shift from supporting the incumbents to supporting the new incumbents. The more I’m able to assemble a socially-aware version of Comcast that leverages the cloud of influentials I track, the less I pay in to the aggregated mainstream services that are relatively opaque to useful social signals.

It’s possible new media will steal a page from the VCs and the economics of the Cloud, putting these streaming deals together on multiple networks (Facebook, YouTube, Ustream, iCloud) with talent owning the rights in return for low startup costs. Spotify could fight off the independents by offering contracts directly to the artists, and team with the streaming studios to live cast sessions and concerts over the federated network. Soundtrack compilations for stream network-owned series like House of Cards may be where music and gaming crossover first occurs.

And just if by magical thinking, Techmeme tells me Netflix is bringing back Arrested Development, the popular comedy produced and voiced-over by Ron Howard and cancelled by Fox in 2004. What’s even more interesting is that the resurrection is exclusive to Netflix, a streaming version of what HBO pioneered with Sopranos et al. Premium original content bundled on what may well be the first example of streaming achieving a credible cable cutter foothold. With Twitter pushing breaking news and the studios beginning to go direct to Netflix and Amazon, can a return to the West Wing be far behind?